US Crude Inventories Spike 7.14 Million Barrels

US crude oil inventories increased by 7.14 million barrels for the week ending September 11. This figure reversed a draw of 300,000 barrels recorded in the previous week. The sudden supply increase halted the recent rally in crude prices. Traders reacted immediately to the data release.

The Canadian Dollar lost momentum due to its link with oil markets. The Euro strengthened against the CAD to trade around 1.6090. This marked the second consecutive day of gains for the Euro. Markets are also awaiting Eurozone Industrial Production data for July.

Supply Disruptions Threaten Rebound

Geopolitical risks remain a significant factor for energy prices. Saudi Arabia canceled several September crude deliveries to European buyers. These cancellations followed drone strikes on the East-West pipeline. The pipeline is a vital route bypassing the Strait of Hormuz.

Houthi militants have renewed attacks in the region. The operational status of the Saudi pipeline remains uncertain. There is no clear timeline for its reopening. These disruptions could trigger a quick rebound in crude prices.

Eurozone Monetary Policy Expectations

Market expectations for the European Central Bank have shifted. Traders are pricing in a sustained tightening cycle. Rabobank strategists note that money markets price more than four additional rate hikes. This goes beyond the two hikes already delivered by the ECB.

Investors expect a proactive response from central banks. This view is consistent with current yield curve data. The market anticipates more than a single policy move. This stance supports the Euro against commodity-linked currencies.

Canadian Inflation Remains Stable

Canadian inflation held at 3% year-over-year in August. This figure is unchanged from July. Royal Bank of Canada economists describe the price environment as stable. Headline pressures remain contained despite high food and energy costs.

Underlying inflation dynamics align with the Bank of Canada target. The central bank aims to keep inflation between 1% and 3%. Current data suggests the policy stance remains appropriate. The Bank of Canada is expected to hold rates steady.